IOCL Sees 50% Surge in Q4 Net Profit Amid Unpaid LPG Subsidies

Indian Oil Corporation’s Impressive Q4 Results: A 50% Surge in Profit

In a remarkable financial turnaround, Indian Oil Corporation (IOC) reported a striking 50% increase in net profit for the January-March quarter of the 2024-2025 fiscal year. The company’s standalone net profit soared to ₹7,264.85 crore compared to ₹4,837.69 crore in the same quarter the previous year, showcasing the effectiveness of its strategic operations. This surge in profit is particularly notable when contrasted with the ₹2,873.53 crore earnings from the preceding quarter.

Factors Behind the Profit Surge

The substantial profit increase can largely be attributed to inventory gains. IOC capitalized on lower crude oil purchase prices and subsequently sold refined products at higher market rates, leading to significant inventory profits. These gains effectively offset the ₹5,601 crore losses incurred from subsidized domestic cooking gas (LPG) sales.

Key Financial Highlights:
- Q4 net profit: ₹7,264.85 crore
- Previous year’s profit: ₹4,837.69 crore
- LPG sales losses: ₹5,601 crore
- Gross refining margin: $7.85 per barrel

IOC Chairman A.S. Sahney noted during a media briefing that the company’s performance had improved across all operational metrics, while also hinting at a recovery in market share. He emphasized the positive trajectory of their operational efficiency.

Subsidized LPG and Government Response

Despite the profit increase, IOC and other state-owned retailers faced challenges in the domestic LPG sector. They sold cooking gas at prices below production costs without receiving government compensation in the 2024-25 fiscal year. To partially address the financial discrepancy, the government raised the price of LPG by ₹50 per 14.2-kg cylinder earlier this month.

Impact of LPG Pricing:
- IOC’s total loss on LPG sales for FY25: ₹19,926 crore
- Government’s strategy to bridge the gap includes increasing excise duties on petrol and diesel.

The government’s decision to hike the excise duty by ₹2 per litre on petrol and diesel is expected to generate approximately ₹32,000 crore in additional revenue. This revenue could potentially fund LPG subsidies for companies like BPCL and others, offering some relief amid ongoing operational challenges.

Yearly Overview and Refinery Performance

For the entire fiscal year 2024-25, IOC’s net profit declined to ₹12,962 crore from the previous record of ₹39,618.84 crore in 2023-24. This dip can be attributed to the lack of price reductions on petrol and diesel, despite falling global oil prices.

In Q4, IOC’s refineries processed 18.548 million tonnes of crude oil, a slight increase from the 18.282 million tonnes processed the previous year. However, the total refinery throughput for FY25 decreased to 71.564 million tonnes, down from 73.308 million tonnes in the prior fiscal year due to planned shutdowns.

Sales Metrics:
- Q4 market sales: 24.601 million tonnes
- FY25 total market sales: 100.477 million tonnes

Conclusion

The fiscal year 2024-25 marked a milestone for IOC as it surpassed 100 million tonnes in total sales. Despite the challenges posed by subsidized LPG pricing and refining margins, IOC remains a key player in India’s energy sector, demonstrating resilience and adaptability in a fluctuating market landscape. As the company moves forward, it will be essential to monitor its strategies and how they respond to ongoing economic pressures.